Fairscore Ltd · DRN-6251578

The complaint Miss W complains that Fairscore Ltd trading as Updraft (Updraft) lent to her irresponsibly when granting three consolidation loans which were unaffordable and worsened her financial situation. What happened Miss W applied for and was granted the following consolidation loans by Updraft as shown below: Date Loan Amount Interest Rate Loan Term Monthly Repayment September 2022 £5,000 25.9% 40 months £184.03 March 2023 £15,000 24.9% 60 months £436.40 December 2023 £4,000 26.9% 36 months £163.09 In summary, Miss W says she should not have been offered any of the loans as given her financial situation at the time, these were inappropriate lending for her. I have taken this to mean that Updraft failed to perform sufficient checks before lending to her. She says the lending has caused her to fall into further financial hardship and a worsening spiral of indebtedness. Miss W complained to Updraft in June 2025 who considered the matters raised but did not uphold her complaint. In their Final Response Letter dated August 2025, Updraft say they performed a proportionate verification of both income and expenditure before each lending decision. Updraft said their actions were fair and referenced application data, credit file reports, data modelling and latterly account management history. Updraft say they saw no evidence of financial distress and took a conservative approach to affordability. They said as a result, their lending was appropriate and fair. Miss W disagreed and brought the matter to this service in September 2025. An investigator considered the available evidence and merits of the case. In his view, none of Updraft’s affordability checks had been reasonable and proportionate. He said having considered Miss W’s current account records from the relevant period, it was clear Miss W was in a cycle of dependant lending and none of the loans should not have been offered by Updraft. Updraft didn’t accept the investigator’s view raising concerns over the methodology used and the proportionality of the approach taken to reach the view. As no agreement was reached, the matter came to me to make a final decision. I reached a different conclusion to the investigator so issued a provisional decision. An extract follows and forms part of this final decision. I thank Miss W for her focused response to the provisional decision. The deadline for responses has expired which allows me to issue a Final Decision now.

-- 1 of 7 --

Extract from my provisional decision Loan one When Miss W applied to Updraft for her first consolidation loan, she declared an annual gross income of £32,000. She provided details of her outgoings and linked her current account to the application via Open Banking. In addition, Miss W agreed that Updraft could run a credit check in support of her application. Miss W stated the loan was to pay off existing credit card debt. Updraft validated the declared income by Open Banking and allowed an observed monthly average income of £1,944.73 which was in line with the declared annual income. In addition, Updraft used a combination of Miss W’s application and Office of National Statistics (ONS) modelling data to estimate her monthly expenditure. I note this resulted in Updraft uplifting the declared housing/rent and other living expenses by a total of £520.17 per month in excess of that declared by Miss W. Finally having done this, Updraft consulted the content on Miss W’s credit file. At the time of the first application, this showed around £20,000 of unsecured debt a sizeable amount of which was credit card debt. There were no County Court Judgments, bankruptcies or Individual Voluntary Arrangements (IVA) in place. No defaults were present and existing lines of credit were being operated within their credit limits and managed well with no missed or late payments shown. Considerable debate has taken place within the evidence I have seen as to the level of Miss W’s indebtedness at this time. This stems from a difference in the calculation of debt to income ratio between Updraft and the investigator. Updraft calculate it at 61.37% based on gross income, the investigator reaches 108% based on net income. I have considered both values and reach the same conclusions. A debt to income ratio of 61.37% is relatively high. But, it is not uncommon in the consolidation loan or specialist lending market. Updraft say Miss W’s application was within their normal application range. I would certainly give this figure some weight, but I don’t think it would be enough on its own to exclude further lending depending on the content of the credit file and wider application. Nor is a net income to debt ratio of 108% too far from the 116% national average household figure for disposable income at the time. (Source: House of Commons Library - Household debt statistics and impact on economy). Again, its importance would be influenced by the credit file content and wider application. In his view the investigator said that it was clear debt of this level was causing Miss W a financial burden and the evidence suggests lending was inappropriate at each point. The net debt to income ratio of 108% played a significant part in his view that inadequate checks had been made by Updraft. Updraft disagreed that the evidence they saw at the time suggested ongoing financial difficulties. In considering the first loan, I don’t think Miss W’s debt to income ratio was barring (however calculated) by itself for a consolidation loan. Nor do I think the credit file as visible to Updraft showed content that should have caused Updraft to consider the lending inappropriate at that point. Given the broadly positive content of the credit file, the intended purpose of the loan and the amount of credit being extended, I am minded to say that the checks made by Updraft were reasonable and proportionate to the lending. I have also considered the adjustments made to the declared expenditure and the verification of income via Open Banking in reaching my provisional decision on this point.

-- 2 of 7 --

Given this, I do not think it would have been proportionate for Updraft to have requested or considered current account records to reach this lending decision. I am also minded to say that Updraft turned their minds to Miss W’s ability to repay the loan. Again, this is supported by the adjustment to the declared expenditure based on ONS datasets and the anticipated reduction in expenditure given the purpose of the loan. Having seen the figures relied upon by Updraft and having run my own calculations, I believe Miss W had a disposable income at the time such that the lending could likely be afforded. Given this, I am minded to say that the initial lending decision was fair. Loan two Six months after the initial loan, Miss W applied for a further consolidation loan of £15,000. Before looking at what Updraft did, I must consider whether a second loan six months after the first is by itself cause for concern. It is not uncommon for debt consolidation to take place in phases or for a smaller amount to be used to test the lending waters before a larger amount is requested. Updraft say they treated the subsequent loan afresh to ensure affordability and applied the same tests before lending. I am minded to say the second loan application was not in itself worrying, but the appropriateness of the lending would be heavily influenced by the stated purpose, the content of the credit file and account management history. Miss W said she wished to consolidate credit card debt with this loan. Through Open Banking, Updraft validated that Miss W’s gross annual income had increased to £38,500 and through Open Banking Updraft could see the original loan had been used to consolidate external card lending. Declared expenditure was again validated using ONS data models and Miss W’s declared expenditure figures were revised up by around £500 from those she declared. The credit file seen by Updraft showed no defaults, no CCJs, IVAs or similar arrangement with creditors. The credit file also showed good external account management with no delinquencies or issues. Updraft also say the account management of Miss W’s first loan to this point had been excellent with no late or missed payments. Additionally, Miss W’s credit card debt had been reduced with a marked reduction on debt to income ratio (using either methodology) since the first loan. In his view, the investigator said that because of the high net debt to income ratio and the fact that Updraft didn’t confirm which accounts were to be consolidated the checks made by them were insufficient. He then moved to consider what current account records showed. Here I don’t agree with the investigator. Given the credit file seen by Updraft remained broadly consistent and positive and given the verified new income and revised expenditure figures, I think Updraft had done enough. I have given thought to the suggestion that Updraft should have been more precise and/or prescriptive in their view of what exactly would be consolidated. It is no longer typical industry practice to manage amounts being consolidated (other than for same lender products). Also, Updraft had evidence that the first loan for consolidation had been used for that purpose. Updraft are able to rely on the answers provided to them in good faith. In this case Miss W said the purpose of the loan was to consolidate her credit card debt. I think it is reasonable for Updraft to have relied on this and factored this into their affordability considerations.

-- 3 of 7 --

I do not think it would have been proportionate to call for current account records given the content of the credit file seen by Updraft and Miss W’s good account management to date with Updraft. Had Updraft asked for further information short of accounts (i.e. clarification as to exactly what would be consolidated), I am persuaded that Miss W would likely have identified the credit card accounts she subsequently paid down within a very short period after funds were released to her. Having reviewed the income and expenditure figures relied upon by Updraft and calculated my own version, I am persuaded that Miss W had a disposable income at the time such that the lending was affordable. I am minded to say that the checks made here were proportionate and reasonable to the lending being offered and the lending decision was fair. Loan three In December 2023, Miss W made a further application to Updraft for a consolidation loan. The same process was undertaken by Updraft who referenced the latest application along with Miss W’s credit file and ONS data to assess the application. Again Updraft uplifted Miss W’s expenditure by £500 over that which she declared. Again, the credit file and open banking validated a current annual income of £38,500. There were no CCJs, defaults, bankruptcies, IVAs, agreements with creditors or missed payments. But loan two had significantly increased the debt to income ratio which was now just over 88%. Updraft agree this figure but say this is an improving situation during consolidation. Updraft point out that Miss W had reduced her credit card debt by more than half and moved revolving debt into fixed term debt with a known end point via this lending. However, this is now the third consolidation loan in relatively short succession. Updraft point out the first two dealt with credit cards and overdraft debt whereas this loan was to consolidate other lending. However, I would now expect Updraft to do more than they did to confirm Miss W’s actual position. I am persuaded Updraft had a good view on Miss W’s income, but I would have expected them to have confirmed her actual outgoings given this was now the third consolidation loan. This need not have involved calling for current accounts, but could have clarified high level expenditure figures in addition to their in house modelling. I would also have expected Updraft to seek further clarity over the overall process of debt restructuring taking place. Again, this could have been a conversation or call for information short of examining current accounts. While recognising this further lending was for a smaller sum, I still think Updraft should have done more and am minded to say that the checks performed for the third loan were not proportionate or reasonable for the lending being offered. Having said that the checks made were not proportionate or reasonable for the lending, I will next turn to what reasonable checks would have likely revealed had they been made. To recreate this, I have used current account records to recreate broad categories of expenditure. I have not performed a full forensic investigation of the current account records and do not believe that would have been necessary or proportionate for this lending. I will comment on two matters raised by the investigator at this point. I am asked to consider a returned Direct Debit for £25 as evidence that Miss W was not managing her account well. I am also invited to consider the continued use of Miss W’s agreed overdraft facility at this time.

-- 4 of 7 --

For Miss W’s understanding, I will explain why I cannot consider these at this time. Both matters are only visible by reference to the current account records and were not available to Updraft or shown on the credit file at the time of the lending. Having already said I don’t believe the additional checks needed to go to the level of current account examinations, I cannot include matters Updraft could not see and needn’t have accessed at the time. Returning to what the reasonable checks are likely to have revealed, I have re-checked the calculations performed by Updraft and completed my own. These indicate a disposable income at the time of the third lending decision of just over £200 per month. This is such that it appears the lending was affordable. I note this figure is not disputed by the investigator. I will address the remaining concern raised by the investigator in his view, that payments could not be sustainably repaid and monthly payments to Updraft provided Miss W no reasonable way to bring her balances down. I cannot agree given the nature of these loans. These are fixed term agreements not revolving credit so the loan would be reduced to zero over its term. Given all of the above, I am minded to say that although the checks performed for loan 3 were not proportionate for the lending, had they been performed the lending was likely affordable. I am therefore minded to say the lending decision was fair. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Miss W has responded to my provisional decision and provided additional information to support her response. I would like to thank her for her focused response. I have read this in totality and considered the points raised carefully. I am asked to reconsider three main areas and will respond to these in the remainder of this decision. The difference between the use of ONS average datasets and Miss W’s lived experience. In Miss W’s response, I am asked to reduce my reliance on the ONS modelling used by Updraft and substitute current account and similar records showing Miss W’s actual position at the time of the lending. Miss W says these provide a more accurate picture of her finances at the time. Miss W says these differ considerably from the ONS averaging used by Updraft. I am happy to accept this is correct, but it is not the test I must apply. It is not my role to perform a retrospective analysis of actual spending against the estimated figures produced by Updraft’s modelling. My role is to decide whether Updraft made proportionate and reasonable checks before lending and whether any lending decision was a fair one in the circumstances. This means I can only consider what was visible to Updraft in those reasonable and proportionate checks, or if they weren’t made what would have been visible in reasonable and proportionate checks. ONS data modelling is an accepted industry method of estimating expenditure either by itself or combined with other inputs. Updraft are permitted to use this unless there are reasonable grounds to believe that the borrower wouldn’t fit within a range of average lenders. I haven’t seen anything to suggest this was the case. Having seen the evidence in this case, Updraft used ONS data but also validated their estimates with the content of Miss W’s credit file and their own in house models. This resulted in them applying an additional £500 to the expenditure disclosed by Miss W in all

-- 5 of 7 --

three loans. I do not think Updraft placed unreasonable reliance on ONS data in performing their checks. The proportionality of the checks performed by Updraft. In my provisional decision, I found that the checks made by Updraft were reasonable and proportionate for the first two loans but were not proportionate for the lending in the case of the third loan. Miss W says had proportionate checks been made this would have shown payments into her account to keep her within her overdraft limit, use of buy now play later providers for daily living and a returned direct debit. In my provisional decision I said although not all the checks performed by Updraft were proportionate, none would have needed to call on current account records to make a lending decision. I do not think it would have been proportionate for more intrusive checks to have been made given the broadly positive nature of Miss W’s credit file, her verified income and the positive management of her Updraft loan over the preceding six months. In saying Miss W’s credit file was ‘positive’ I recognise this is a relative term. I mean there were no County Court Judgments, Individual Voluntary Arrangements, arrangements with creditors, payment plans, defaults, late payments or signs of account delinquency. There were no issues reported on existing lines of credit and debt to income ratio had reduced considerably. Given proportionate checks would not have needed current accounts or third party shopping account records, these would not have formed part of Updraft’s decision making. It remains my view that the checks on the first two loans were reasonable and proportionate to the lending being offered. The third loan checks remain too limited to be proportionate for the lending, but this could have been resolved by clarifying/confirming current outgoings with Miss W without the need to call in current account records. In relation to the returned Direct Debit Miss W mentions, this was not on an account to which Updraft had access via Open Banking. As I have said reference to current accounts was not necessary or proportionate, this would not have been seen by Updraft on the credit file or at the point of the lending decision. The sustainability of payments and disposable income (loans 2 and 3) Miss W asks me to consider regular payments made to her account by her partner to keep her within her overdraft limit. She says “By relying on unrecorded debt to maintain my ‘positive’ credit file, the Updraft loans were, by definition, unsustainable.” Having considered this carefully, I cannot agree. The important fact is that this additional debt (to a partner) is as Miss W acknowledges unrecorded. Such lending would not have appeared on a credit file and was not disclosed by Miss W so Updraft could not have been aware of the fact. I cannot criticise a lender for not factoring in lending and debt of which they had no knowledge. I must also return to the calculations performed independently by Updraft, the investigator and repeated by me. In each case, those revealed a disposable income for the second and third loans such that lending was likely affordable. For the reasons given above, having considered Miss W’s additional points, I remain of the view stated in my provisional decision.

-- 6 of 7 --

In reaching my conclusions, I’ve also considered whether the lending relationship between Updraft and Miss W might have been unfair to Miss W under s140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve already explained, I’m satisfied that Updraft did not lend irresponsibly when providing Miss W with the loans. I haven’t seen anything to suggest that s140A CCA would, given the facts of this complaint, lead to a different outcome here. My final decision My final decision is that I do not uphold Miss W’s complaint against Fairscore Ltd trading as Updraft. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss W to accept or reject my decision before 22 April 2026. Richard Bellamy Ombudsman

-- 7 of 7 --